Life and Debt | A Film By Stephanie Black

Life and Debt - Recently watched this documentary which clearly chronicles the havoc wrought by IMF 'Structural Adjustment' programs imposed (or rammed down their throats) on Jamaica since the 70s. The relentless and demented logic of the IMF inexorably and in deadly slow motion leads Jamaica into into its current desperate situation that is many times more desperate than when it had to accept the stringent IMF conditions in the 70s.

Roughly speaking, the 'tricks' of the IMF are elucidated via the specific Jamaican example, the main points of which are outlined below.

1. Make sure the country that approaches the IMF is already very desperate (say due to sudden increases in oil prices)
2. Being desperate and/or naive, the country is likely to accept the most stringent terms on the loan.
3. The money loaned can only be used in very specific ways (it cannot be used for local infrastructure development, education, health care etc.). This prevents the country from becoming self-sufficient eventually (which anyone who has any sense would agree should be the primary goal of the loans ... but not in the IMFs book)
4. Expose and destroy local industry to foreign competition (such as cheap potatoes from Idaho etc.) (i.e advocate free market for Jamaica by removing tariffs etc.). However, note that the potatoes produced in America are heavily subsidized by the government, hence America is able to export them and sell them to Jamaica cheaply, hence undermining the local industry. So, the IMFs strategy: powerful government to protect the rich, and market discipline and tough love for everyone else.
5. Use the loans to build free trade zones where workers slave under horrid conditions. The purported reason being to provide employment and manufacture goods using LOCAL raw materials. In practice, the free trade zone avoids local taxes and uses only imported materials thereby undermining the local economy. And the working conditions, less said about that, the better.
6. To service the interest on the loans, take on further debt, and so on, ad nauseum.

Glorious Unmasking

The ruling elite (Wall Street) and their servants (The Bush-Obama-McCain-Democrat-Republican nexus) have been self-unmasked in a way that no amount of activism/agitation/blogging could have achieved in a hundred years. Watch Obama-McCain squirm, lie, vacillate and be psychopathic as they try to please their true masters while simultaneously pretending to be interested in public welfare.

Of course, there was some confusion/posturing within party ranks which caused the bailout to fail the first time. The bailout bill will pass the next time. Wall Street owns you, you have no choice. Welcome to the world of odious debt.

Private (mortgage) Debt -> Financial Sector Debt -> Insurer -> Insurer -> Insurer .... -> Public Debt. As you can see, to avoid an infinite regression of insuring bad loans, the terminating condition for Wall Street is that everything gets converted to public debt. In other words, Wall Street always has an insurer. The public is essentially being held at gunpoint as an unwilling insurer.

Note that as long as the Financial Sector makes profits from risky loans, they don't make a sound (what profits?). Eventually, due to the high risk, loans are not repaid. In a capitalist society, it is assumed that the lender should take the loss. Note how nothing of that sort ever happens in reality. The current heist by Wall Street only relieves financial sector debt by conveniently converting it to public debt (so that Wall Street can merrily continue going about their obviously nasty business, makes one wonder if they are human beings or some otherworldly freakish aberrations?). Note how Private (homeowner) Debt and Public debt continue to remain a severe problem.

In case this isn't clear, lets make a simple analogy.

This is the guarantee that Wall Street has from their servants in public office.

1) Feel free to go to the casino. Make sure you don't tell anyone it's a casino.
2) Assume an unlimited supply of hassle-free borrowed money with which to gamble. No one will keep any record.
3) If you win, you get to keep all your winnings, in fact you don't even need to report any winnings. Use these winnings for personal pleasures and to help us (your humble servants) get reelected.
4) In case you lose, don't worry, you can keep your earlier profits. If you knew that you were going to lose in advance, first consolidate and distribute all the profits amongst yourselves. Then let shit hit the fan.
5) You don't have to make good on the losses.
6) Someone else will take the fall for the losses.
7) That someone else is fully captive and can be bent at will.
8) That someone else is the public. Most of this public never saw any gains whatsoever, but we'll make them pay up. They'll have to pay up, because we said so. If they make any inconvenient noises about it, we'll pretend to listen, but completely ignore them at the same time. This is the role of public servants: Never solve any problems, maintain power and make soothing noises to pacify the public.
9) In case the public makes so much noise that soothing them via words becomes very difficult, not to worry! We already have all the police and military apparatus in place to squash even the most minor rebellion/protest/revolt. We've even built jails (concentration camps) in advance exactly in case of such a contingency. Ironically, the jails will have been funded by the very people we're going to imprison and maybe torture.
10) The true irony is that in spite of us robbing them blind, the public will continue to seemingly elect us via a meaningless electoral process.


Parting words from George Orwell

Obedience is not enough. Unless he is suffering, how can you be sure that he is obeying your will and not his own? Power is in inflicting pain and humiliation. Power is in tearing human minds to pieces and putting them together again in new shapes of your own choosing. Do you begin to see, then, what kind of world we are creating? It is the exact opposite of the stupid hedonistic Utopias that the old reformers imagined. A world of fear and treachery and torment, a world of trampling and being trampled upon, a world which will grow not less but more merciless as it refines itself. Progress in our world will be progress towards more pain. The old civilizations claimed that they were founded on love or justice. Ours is founded upon hatred. In our world there will be no emotions except fear, rage, triumph, and self-abasement. Everything else we shall destroy — everything. Already we are breaking down the habits of thought which have survived from before the Revolution. We have cut the links between child and parent, and between man and man, and between man and woman. No one dares trust a wife or a child or a friend any longer. But in the future there will be no wives and no friends. Children will be taken from their mothers at birth, as one takes eggs from a hen. … There will be no loyalty, except loyalty towards the Party. There will be no love, except the love of Big Brother. There will be no laughter, except the laugh of triumph over a defeated enemy. There will be no art, no literature, no science. When we are omnipotent we shall have no more need of science. There will be no distinction between beauty and ugliness. There will be no curiosity, no enjoyment of the process of life. All competing pleasures will be destroyed. But always — do not forget this, Winston — always there will be the intoxication of power, constantly increasing and constantly growing subtler. Always, at every moment, there will be the thrill of victory, the sensation of trampling on an enemy who is helpless. If you want a picture of the future, imagine a boot stamping on a human face — forever. ~George Orwell

Conservatorship and other BIG LIES

Do we need any more proof for the dictum - Privatized Profits and Socialized Losses ?

Someone tell me why the fuck we need to bailout the Wall Street casino gamblers ?

The coup de grace ? America's national debt DOUBLED on September 7th (Conservatorship, they called it).

The definition of conservatorship ? "The protection of something affecting public welfare and interests" -- That's quite accurate IF by public interest they mean the kleptocrats in high places. So democratic, it makes me sick.

Inclusive Growth ?

If you haven't yet read any of P Sainath's research on India's agrarian crisis and 150,000 farmer suicides from 1997 to 2005, please do so.

Anyway, Sainath often talks about how the Sensex (Stock Index) and the Misery Index of the poor in India are inversely proportional. For example, consider this excerpt from one of his articles

It all happened around the same time. The day the Sensex crossed 19,000, India clocked in 94th (That's out of 118 countries) in the Global Hunger Index - behind Ethiopia. Both stories did make it to the front page (in one daily at least). But, of course, the GHI ranking was mostly buried inside or not carried at all that day. The joy over the stunning rise of the media's most loved index held on for a bit the next day. The same day, India clocked in as the leading nation in the number of women dying in childbirth. In this list, the second, third and fourth worst countries put together just about matched India's 1.17 lakh deaths of women in childbirth. This story appeared in single column just beneath the Sensex surge.

The facts to prove Sainath's point about the twisted inverse proportionality never stop pouring in. On Friday, India’s Finance Minister P. Chidambaram unveiled a so called "populist" budget. It proposes $15 billion to write off debt owed by small farmers to banks. The Sensex reacted in its twisted fashion. India’s stock markets fell on news of the government proposal to waive the debt of small farmers. The Sensex index was 1.4 per cent lower at 17,579 points at the provisional close.

Of course, significant portion of India's population depends on agriculture which is expected to grow at a measly rate (2.6%) compared to the rest of economy (8%)

The "populist" budget also reveals its dark underbelly. Defense spending is up by 10 per cent to 26.4 billion dollars, to fund a mammoth modernisation programme. The usual justification is of course, Security! We need more of it, forever!. India is planning one of its biggest ever arms purchases, a $10 billion deal to buy some 26 fighter jets and US Defense Secretary Robert Gates was in India earlier this week to push (pimp ?) American bids for that deal (Military Industrial Complex alert!). India also has plans to spend $30 billion on imports over the next four years to modernise its largely Soviet-era arms (the usual boondoggles). Yes, all this is somehow going to improve security, we're supposed to naively accept. Apparently, dissatisfied defense officials think this increase is "not adequate".

The Financial Times says India’s poor gain from budget

The entire budget speech can be found at Finance Minister P.Chidambaram's Budget Speech 2008-09


References:
Indexing inhumanity, Indian style
India raises defence spending, writes off $15bn farmers’ loans
US, India to study joint missile defence, says Gates
India's defence budget rises, but problems remain
Finance Minister P.Chidambaram's Budget Speech 2008-09

Middle-Class Millionaires

This could be one of the most ridiculous articles ever.

Worth $4 Million -- and Unable to Retire

In a bizarre twist, the word middle-class is given a nonsensical interpretation, and the "plight" of "middle-class" millionaires takes center stage.

Apparently:

"Mansions and yachts are out. The mMillionaires ("clever" acronym for the "middle-class" millionaire) who want to retire before age 65 or 72, find they must live in three- and four-bedroom homes and drive mid-priced four-door sedans and mini-vans." 

"There's no question that more people are accumulating wealth at an unprecedented rate"

I plan to be VERY sympathetic to the "plight" of the mMillionaire.

"Free" Market

More evidence that "free" market is merely an ideological phrase that has nothing to do with how things really are.

By defintion, capitalism implies that the lender takes full risk when he makes a loan. However, its clear that nothing like that applies in reality. What we have instead is a privatization of profit (yes, the capitalist definitely keeps all his profits, also trickle-down theories are a load of crap), but if something goes wrong, then the public has to bear the brunt of the cost (externalization, as it's sometimes called to just to disguise what it really means). If it's not yet clear, the current system works as follows : Privatize Profit, Socialize Risk.

For example, consider these events recently:

The state (undoubtedly that means that the public bears the brunt) rescued the shady hedge funds/investment banks by offering vast sums of money and rate cuts. Apparently, this is through the "overnight discount window". Only it isn't overnight, it's for 30 days, and can be extended for free. It would be nice if all our credit cards had such nice terms. Not! Note that the same banks have made billions (or trillions ?) from the same hedge funds. Where are all the profits ? Offshore banking, perhaps. And why should the public bail these "capitalists" ? What a load of bullshit.

With the Northern Rock debacle, Chancellor of the Exchequer Alistair Darling, not content with rescuing just one bank, grandly announced that all failing banks would have their deposits guaranteed by the taxpayer.

And, then we had the recent Fed interest rate cut. What this means is more cheap cash for Wall Street (yay! soaring stock prices, but shaft the public) and more devaluation of the dollar which means higher prices for food and energy. Ultimately, it's the public that gets shafted. Anyway, if it were truly "free" market, why do we have the Fed regulating interest rates ?
References:

Bernacke's Bail Out of Wall Street
Fed drops the Inflation Bomb
The Era of Global Financial Instability
IMF/WB Debt Forgiveness
The Gotterdammerung of Central Banking

Debt Money System

Below is a very lucid article explaining monetary systems in general, and more specifically goes into the details of a debt-based monetary system. It's also very useful to read some reader's comments in the same article (especially DGW) who adds further clarity to the nature of the unsustainable debt-based monetary system. An analogy to cigarettes makes the entire article less dreary and very simple to understand.

Our Debt Money System Explained
by Michael Nystrom
August 23, 2007

This is Reform ?

The current Prime Minister of India, Manmohan Singh (also the chief architect of India's disastrous neo-liberal 'reforms' since 1991) recently exhorted the corporate world (or "industry captains") in India to assume "social responsibility" to alleviate income inequality, reduce conspicuous consumption and cap exorbitant CEO salaries. He tossed around phrases like "inclusive growth", “socially responsible media and finance socially responsible advertising”, "worker welfare", "extended affirmative action" and "cartelisation". Various commentators are already talking about the PMs transformation from "reform" to "socialism". His speech to the CII (Confederation of Indian Industry) can be found here.

Coming from the chief architect of India's disastrous neo-liberal reforms since 1991, the PMs words sound hollow, superficial and guilt-ridden. In 1991, his neo-liberal reforms resulted in the scrapping on India's previously state-managed economic development with unfortunate consequences. For the period from 1996 to 2005, the annual agricultural growth rate fell to 1.1 percent from an average annual growth rate of 3.2 percent during the 1980-96 period. The 1.1 growth rate was barely a quarter of the 4 percent agricultural growth target that the government had set for the 10-year period of 1996-2005.

During the 1990s the World Bank pushed large loans making India dependent on foreign finance. World Bank loans are always accompanied by "reforms" and "structural adjustments" such as deregulation, privatization, tax cuts, the gutting of all restrictions on the laying off of workers and closure of plants, and the slashing of “non-productive” social expenditure. Indonesia and Argentina are but a few examples of the results of World Bank loans and "structural adjustments" and India is rapidly joining the ranks.

According to the The UN Human Development Index (HDI) of 2003, India ranks 127 (was at 115 in 2001). So clearly the "reforms" aren't working. In 2004, expressing clear displeasure with the so-called reforms, the ruling party was voted out of power. Privatization of water-supply and other crucial public services have resulted in price increases. Reforms require the dismantling of public and social responsibility and opening up domestic markets to transnationals. Debt repayment and military spending prevent the nation from focusing on resolving social issues.

P Sainath, an award-winning Indian development journalist who focuses on social problems, rural issues and poverty describes the magnitude of the problem (see http://www.indiatogether.org/opinions/talks/psainath.htm) below:

"The crisis states are AP, Rajasthan and Orissa. In the single district of Anantapur, in Andhra Pradesh, between 1997 and 2000, 1800+ people have committed suicides, but when the state assembly requested these statistics, only 54 were listed. [see April 29 and May 6 issues of The Hindu, for more details]. Since suicide is considered a crime in India, the district crime records bureaus list categories for suicide - unrequited love, exams, husbands' and wives' behavior, etc.; in Anantapur, the total from these categories was less than 5%. The largest number, 1061 people, were listed as having committed suicide because of "stomach ache". This fatal condition results from consuming Ciba-Geigy's pesticide, which the government distributes free, and is almost the only thing the rural poor can readily acquire."

"In India, people have the perception of "subsidies" being given to farmers, and this is one of the reasons why the urban folks think that farmers need to improve their act. But the vast majority of this subsidy is given not to the farmers themselves but to fertilizer producers. The "farmers" who get this subsidy are called Birla, Tata and Ambani! Also, this is given in such a way that the more you produce the lower the rate of subsidy, and the smaller amounts you produce, the more higher the rate of subsidy. In theory, this should support the "small farmers", but in fact the large producers overproduce and understate their output, just so they can avail of the higher rate of subsidy." 

"The poor farmer is sometimes portrayed as uncompetitive, and that he lives off subsidies; many people take the view that if he cannot compete with global players, he should try something other than farming. But the reality is that Indian farmers are asked to compete with U.S. farmers who get $35,000 in subsidies per farmer! The European Union conducts its milk and cheese bonfire each year, destroying surplus which might depress prices if released in local markets instead. With markets forced open by trade agreements, that produce is dumped in India (and elsewhere), and it kills the livelihood of the everyday milkman."

The New Economics Foundation (UK based) released a report (2006) about the world economy. According to this report, "Growth isn't working: the uneven distribution of benefits and costs from economic growth, shows that globalisation is failing the world's poorest as their share of the benefits of growth plummet"

In India, the reforms only benefit the upper echelons with income inequality skyrocketing. India now has the fourth largest number of billionaires in the world (36, compared with Japan's 24) with a significant portion the population living in villages or in wretched city slums. The CEO-average worker income differentials in India now stand at a mind-boggling 500:1 or 1,000:1.

In a devious move, Manmohan Singh announced a Cabinet shuffle in February 2006 (ostensibly to broaden regional representation). However if you look closer, this was at the same time as the negotiations on the Indo-US nuclear agreement. The two most significant developments associated with the shuffle were the demotion of Petroleum Minister Mani Shankar Aiyar and Manmohan Singh's decision to retain in his own hands the post of External Affairs Minister. In all probability, this was concession to the US to further the agreement . Mani Shankar Aiyar (Left) was a vocal proponent of the scheme to build a pipeline to deliver Iranian gas to Pakistan and India. The Bush administration repeatedly made clear that it is adamantly opposed to the building of such a pipeline, which would undercut its efforts to isolate the Iranian regime. Aiyar also championed the development of an Asian energy grid to lessen Asian dependence on western-based oil companies, and promoted cooperation between India and China in overseas energy exploration and production. Needless to say, The Unites States was not pleased.

The shuffle was also used to push through a number of right-wing measures (speeding up the pace of "reform" via more privatization, more deregulation, redirection from income-support programs to defense spending) indicating a clear right-wing shift in the Congress party which is prostituting itself to US interests and violating India's traditional non-aligned movement. Note that Manhoman Singh already has a large number of other posts besides that of prime minister. These include head of the Ministry of Personnel, Public Grievances & Pensions, Ministry of Planning, Department of Atomic Energy, and Department of Space and External Affairs (sound like a power grab ?)

Also, see Mani Shankar Aiyars speech to the CII here

I've commented in more detail on the various problems with the Indo-US nuclear agreement here

Being the architect of disaster, could it be that the PM is feeling guilty for wreaking havoc on the country ? Its blindingly obvious that his very own policies have caused the very problems that he's now asking corporations to cooperate with the government in solving. Or is it because he sees a huge increase in domestic unrest (quickly getting uncontrollably out of hand) as a result of social inequality and brutal oppression and is switching panic mode ?

Unfortunately, "corporate social responsibility" is a myth. The capitalist model is responsible solely to its shareholders and is motivated only by profit and greed and is inherently self-destructive and inhumane, so voluntary social responsibility is not going to happen. If Manmohan Singh were really serious about corporate social responsibility, he would enforce government regulations to that effect. For starters, he can place a cap on CEO salaries but that's the least he can do. In fact, he has to start undoing all his own "reforms" by passing regulations to reign in corporations, increase (real) agricultural subsidies and increase taxes on the rich, increase spending on social programs and free India from debilitating World Bank loans.

Maybe, in the PMs guilty admission of the failure of his reforms there is still hope for real reform instead of relying on corporate social responsibility.

On the bright side, we're starting to see roadblocks in the Indo-US nuclear agreement with both sides refusing to yield. According to this very interesting update on the status of the Indo-US nuclear agreement:

"Any lingering doubts on the US stance can be said to have been resolved once and for all by the letter of admonition written to Prime Minister Manmohan Singh by a group of Congresspersons. Dated May 2nd, the letter authored by members of key Congressional foreign relations committees seeks—baldly stated--to browbeat the Indian government into dropping energy-based ties with Iran".

However, in a surprising twist, instead of buckling to US demands, "As recently as May 8 Petroleum Minister Murli Deora affirmed in Parliament that India would not surrender to US threats and that Energy Secretary Sam Bodman had been informed that US interference in the IPI project was unwarranted. The pipeline project could well be the barometer for a cooling off in Indo-US relations and an end to the period of abject submission to US requirements."

Maybe things are looking up.
References:

New Maharajas
World Bank President Wolfowitz pledges $9 billion in loans to India The People who matter most
With cabinet changes, India's UPA government tilts still closer to Washington
Refusing to Pay the Price

The Great Unraveling

Stephen S. Roach is Managing Director and Chief Economist of Morgan Stanley. So, when he uses phrases like 'The Great Unraveling' (Unstable, Unbalanced, Uncoordinated, and Unsustainable, he says gloomily in yet another recent article) to describe the state of the economy, we get an inkling (or maybe depressing certainty) of whats down the road, and its not pretty.

A few ominous snippets from Roach:

" The sub-prime carnage is getting all the headlines these days, but in the end, I suspect it will be only a footnote in yet another post-bubble shakeout"

"All this takes us to a rather disturbing bi-modal endgame – the bursting of the proverbial Big Bubble that brings the whole house of cards down or the inflation of yet another bubble to buy more time"

"I am convinced that this liquidity-driven era of excesses and imbalances will ultimately go down in history as the outgrowth of a huge failure for modern-day central banking"


The Great Unraveling
March 16, 2007
By Stephen S. Roach | from Beijing

Collapse Gap

Collapse Gap (a sarcastic take on 'Missile Gap', 'Space Gap' and the like) is an interesting talk by Dmitry Orlov regarding possible consequences of an impending economic collapse in the United States and the preparedness levels compared to the USSR when it suffered its own economic collapse. While I hope this never comes to pass, Orlov certainly makes many telling observations.

Closing the 'Collapse Gap': the USSR was better prepared for peak oil than the US

The Money Masters

The Money Masters is a documentary produced by produced by Patrick S. J. Carmack. This film discusses in detail the history of central banking, monetary policy and fractional reserve banking and even proposes a monetary reform act.

The entire film is 3.5 hours long and is divided into the following segments:

1. The Problem
2. The Money Changers
3. Roman Empire
4. The Goldsmiths of Medieval England
5. Tally Sticks
6. The Bank of England
7. The Rise of the Rothschilds
8. The American Revolution
9. The Bank of North America
10. The Constitutional Convention
11. First Bank of the U.S.
12. Napoleon's Rise to Power
13. Death of the First Bank of the U.S. / War of 1812
14. Waterloo; Second Bank of the U.S.; Andrew Jackson
15. Abe Lincoln and the Civil War
16. The Return of the Gold Standard
17. Free Silver; J.P. Morgan / 1907 Crash
18. Jekyll Island; Fed Act of 1913
19. J.P. Morgan / WWI
20. Roaring 20s / Great Depression
21. FDR /WWII / Fort Knox
22. World Central Bank
23. Conclusions.

The film is also available on google video in 2 parts totaling 3.5 hours.
Part 1
Part Deux

The official website is at Money Masters